Insider Trading, Analysts ' Forecast Revisions, and Earnings Changes KUMAR SIVAKUMAR"

We provide evidence that insider trading contains value-relevant infor-mation by examining the association of insider trading with subsequent earnings changes and analysts ' forecast revisions. Using a sample of 93,036 observations for 2,181 jrms during 1986-1991, we document sig-n$cant associations between insider trading and short (one-year-ahead) and longer term (two- and three-years-ahead) earnings changes, and be-tween insider trading and analysts ' forecast revisions, showing that in-sider trading contains value-relevant information. Our results also suggest that when insider trading is in the direction of the unexpected earnings news (i.e., insider purchases following good earnings news and sales fol-lowing bad news), insiders may be acting on value-relevant private infor-mation. When insider trading is in a direction contrary to the earnings news, these trades appear to be motivated by the insiders ' recognition of the market mispricing of their securities. 1